Moody’s Investors Service raised its rating on the Northwestern Medical Faculty Foundation by one notch to A1, affecting $75 million of debt, due to its increasingly close affiliation with Northwestern Memorial Hospital and Northwestern Feinberg School of Medicine and an improving fiscal position.

The agency revised its outlook on the credit to stable from positive following the upgrade. The bonds were sold through the Illinois Finance Authority.

The relationship between the foundation and the medical school and hospital includes joint strategic planning and budgeting. The foundation also has experienced growth in its unrestricted cash position and improvement in its core operations.

The rating is supported by the foundation’s status as a large, well-established clinical practice located in an attractive area of Chicago, close affiliation with the school and hospital, and its relatively low leverage.

“NMFF’s challenges include flat Medicare rates and annual threats of Medicare cuts, modest operating margins as a result of a model that transfers funds to support the school of medicine, and moderate (albeit growing) cash position,” Moody’s analysts wrote.

The practice has grown to more than 700 physicians and generates $500 million in annual revenue. The foundation has no immediate borrowing plans.

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